dwfm20

Treasuries Will Disappoint- Continued

Really good article, presents the case for both sides. It's nice to pick up some rational discussion of an issue. Once again we are the inflation/deflation crossroads, and need to pick sides on that discussion to have a strong case to invest. My thought is that it is a moving target, and I would rather adjust my strategy to what actually happens and miss the bottom or top of the curve rather than atttempt to predict inflation/deflation.

Last Thursday Was the Bottom - It's Time to Get Back in

an anonymous bottom call doesn't take much courage; more likely a short term rally which may last a few months in a market headed further south


On Nov 28 01:39 PM oldgoldbug wrote:

> It takes guts to call a bottom, especially when things look so grim.
>
> The point about not reacting to bad news is well taken.
> Only time will tell.

Ultrashort Real Estate Drop Demonstrates Unlimited Faith in a Recovery

"Simply amazing moves on thesis. Ultrashort Real Estate (SRS) is now at the low for the year which means the inverse index (effectively all sorts of REITs) are at the high. The faith in federal government saving all our commercial real estate is apparently unlimited. Quite amazing."

I too was confused by the valuation of SRS being so low vs. early this year. What I have learned the hard way is that you can only count on the valuation of this for a very short term, and even then it will play tricks on you.

If you look at Ishares IYR, a single weight long ETF tracking the Dow Jones US Real Estate Index, which is supposed to be the same index SRS is double shorting, you will see it is no where near it's high for the year.

IYR close today 38.53, high for year is 71.76
SRS close today 57.19, previous low for the year is 61.00

SRS is great if you hit the timing right in the short term, like a week or less, but a disaster if you think you can buy and hold until the trend comes around.

Market Action: Rising Wedge to Resistance

thanks for this explanation of the days trading - will be an interesting week to see which side prevails. The one aspect which makes me skeptical of a large correction is that so many are expecting it.

Roger Wiegand: Oil Prices Create Industry Havoc

Roger's predictions of inflation beginning mid year in 2009 are at odds with most economists I have been reading. Most say inflation is not likely until late 2009 or further out, and then only if Obama's stimulus packages take hold and actually create more than a short term boost for the economy. Also seems to be a conflict of interest since Roger is associated with Kitco selling gold, which would benefit greatly in an inflationary environment.

More Fun with Levered ETFs

Kunst, thank you for pointing this out. I learned this the hard way with SRS on Friday 12/12. It is clear that the current value of these leveraged ETFs has no direct relationship to values it has seen in the recent past, as you would normally expect from an equal weight ETF.

For example, SRS closing at 77.25 on 12/12 vs. 79.6 on 9/22 = down 3%. I don't know what the value change for the Dow Jones US Real Estate index, which is the underlying index for SRS is for this period (can someone tell me where to find this?) for this period but for the same time frame the S+P 500 is down 27%. Seems pretty clear this double inverse ETF is something can't trust or measure in any meaningful way, and it makes you wonder if there is intentional manipulation of the ETF's value to make it look attractive vs. recent history.

What I am getting from this experience is that the leveraged ETFs are only to be held for a very short time, perhaps no longer than a day, and only used when you have a very strong conviction about the short term direction.


On Dec 13 09:03 PM Kunst wrote:

> Watch out for the ProShares ultra and ultrashort (+/- 2x) ETFs.
> They do not do what they claim, even on a day-to-day basis. The
> longer you hold them, the more inherent downward bias their prices
> have, for both directions.
>
> Examples:
>
> 12/10/08, Financials, one day: XLF (financials 1x index) is down
> 0.99%. You would expect UYG (ultra-long) to be up 1.98% and SKF
> (ultra-short) to be down 1.98%. Instead, UYG is DOWN 0.80% and SKF
> is UP 0.18%, exactly the opposite direction and no relationship in
> magnitude.
>
> 12/12/08, Real Estate, one day: URE (ultra-long) is up 7.53%, SRS
> (ultra-short) is down 19.21%.
>
> 12/13/08, S&P 500, one month: SPY (1x index) is up 4%; SSO (2x
> long) is up half as much, 2%; SDS (2x short) is down 17%.
>
> Look at the charts and the situation will be very obvious. And very
> bad.

A deal to provide automakers with $15B to tide them over until March 2009 could be unveiled within 24 hours, Michigan Senator Carl Levin says, though he questions "whether the votes are there." Of GM (GM) CEO Wagoner, Sen. Chris Dodd says, "I think he has to move on."

If Chris Dodd really did get an insider deal from the Countrywide CEO on his own mortgage, I think he should move on....does anyone know if this is for real, and if so, what are the consequences for Senator Dodd?

reference the "Financial Crisis and the Collapse of Ethical Behavior" article posted on The Big Picture Dec. 4, the reference to Senator Dodd is int the footnotes of this paper:

www.greycourt.com/whit...